Tokyo stocks fall back on high-tech sell-off

Stocks turned lower on the Tokyo Stock Exchange Monday, hit by a sell-off in high-tech issues following a slide in U.S. peers late last week, with the Nikkei average falling back below 20,000.

The Nikkei 225 average shed 104.68 points, or 0.52 percent, to close at 19,908.58. On Friday, the key market gauge rose 104.00 points.

The Topix, including all first-section issues, ended down 0.11 point, or 0.01 percent, at 1,591.55, after climbing 1.25 points the previous trading day.

The Nikkei average briefly fell over 170 points, led by weakness of its heavyweight components, after the tech-heavy U.S. Nasdaq composite index tumbled on Friday.

Investor sentiment was also damped by weaker-than-expected Japanese machinery order data for April, released by the Cabinet Office just before the opening bell, brokers said.

The country’s seasonally adjusted core machinery orders, closely watched as a leading indicator of corporate capital spending, fell 3.1 percent from the previous month, against the median estimate of a 1.2 percent decline by 20 economic research institutes surveyed by Jiji.

The Nikkei average stayed in negative territory throughout Monday, while the Topix popped into positive territory temporarily.

“The Tokyo market was dragged down mainly by electronics firms after IT (information technology)-related issues were hit by profit-taking in the United States on Friday,” said Chihiro Ota, general manager for investment research and investor services at SMBC Nikko Securities Inc.

Some view high-tech issues as overvalued after rising at a rapid pace recently, Ota added.

“Japanese stocks will likely be affected more frequently by possible further drops in U.S. equities that have recently moved around at near-record levels, amid a sense of market overheating,” an official of an asset management firm said.

An official of another securities firm said that selling to lock in gains will likely weigh on stocks until the U.S. Federal Reserve’s two-day policy meeting ends on Wednesday.

Falling issues outnumbered rising ones 980 to 896 in the TSE’s first section, while 142 issues were unchanged.

Volume slumped to 1.785 billion shares from Friday’s 2.263 billion shares.

Mobile phone carrier Softbank Group, clothing store chain operator Fast Retailing, industrial robot maker Fanuc and semiconductor-related Tokyo Electron, all heavily weighted components of the Nikkei average, met with heavy selling.

Measurement equipment maker Keyence and electronic parts producers Nidec and Murata Manufacturing were also downbeat.

Other major losers included game maker Nintendo and megabank groups Mitsubishi UFJ and Sumitomo Mitsui.

By contrast, steel producers JFE Holdings and Nippon Steel & Sumitomo Metal, automakers Toyota and Nissan, and oil companies Idemitsu and Showa Shell attracted buying.

In index futures trading on the Osaka Exchange, the key September contract on the Nikkei average was down 90 points to finish at 19,860.

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